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Pensions and Wages: An Hedonic Price Theory Approach

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Author Info
Montgomery, Edward
Shaw, Kathryn
Benedict, Mary Ellen

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Abstract

This paper examines whether a trade-off exists between the level of pension benefits and wages. The 1983 Survey of Consumer Finance is used to match detailed information on pension plans to worker characteristics for a random sample of the population. The pension-wage tradeoff is estimated using both a contractual model of the labor market and the spot market model used in previous studies. The results indicate a large negative tradeoff in the contractual model but only a negligible tradeoff in the spot market model. Results from estimating the underlying structural equations for pensions are also presented. Copyright 1992 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

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Publisher Info
Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.

Volume (Year): 33 (1992)
Issue (Month): 1 (February)
Pages: 111-28
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Handle: RePEc:ier:iecrev:v:33:y:1992:i:1:p:111-28

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Hu, Sheng Cheng, 1988. "Pensions in Labor Contracts," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 29(3), pages 477-92, August. [Downloadable!] (restricted)
  2. Carmichael, H Lorne, 1989. "Self-Enforcing Contracts, Shirking, and Life Cycle Incentives," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 65-83, Fall. [Downloadable!] (restricted)
  3. Woodbury, Stephen A, 1983. "Substitution between Wage and Nonwage Benefits," American Economic Review, American Economic Association, vol. 73(1), pages 166-82, March. [Downloadable!] (restricted)
  4. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb.. [Downloadable!] (restricted)
  5. Steven G. Allen & Robert L. Clark, 1987. "Pensions and Firm Performance," NBER Working Papers 2266, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. Robert S. Smith & Ronald G. Ehrenberg, 1981. "Estimating Wage-Fringe Trade-Offs: Some Data Problems," NBER Working Papers 0827, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. Jeremy I. Bulow, 1985. "The Relationship between Wages and Benefits," NBER Chapters, in: Pensions, Labor, and Individual Choice, pages 379-398 National Bureau of Economic Research, Inc. [Downloadable!]
  8. Hall, Robert E, 1982. "The Importance of Lifetime Jobs in the U.S. Economy," American Economic Review, American Economic Association, vol. 72(4), pages 716-24, September. [Downloadable!] (restricted)
  9. Laurence J. Kotlikoff & David A. Wise, 1987. "Labor Compensation and the Structure of Private Pension Plans: Evidencefor Contractual Versus Spot Labor Markets," NBER Working Papers 1290, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  10. Epple, Dennis, 1987. "Hedonic Prices and Implicit Markets: Estimating Demand and Supply Functions for Differentiated Products," Journal of Political Economy, University of Chicago Press, vol. 95(1), pages 59-80, February. [Downloadable!] (restricted)
  11. Schiller, Bradley R & Weiss, Randall D, 1980. "Pensions and Wages: A Test for Equalizing Differences," The Review of Economics and Statistics, MIT Press, vol. 62(4), pages 529-38, November. [Downloadable!] (restricted)
  12. Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1261-84, December. [Downloadable!] (restricted)
  13. Lorne Carmichael, 1983. "Firm-Specific Human Capital and Promotion Ladders," Bell Journal of Economics, The RAND Corporation, vol. 14(1), pages 251-258, Spring. [Downloadable!] (restricted)
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  14. Ronald G. Ehrenberg & Joshua L. Schwarz, 1987. "Public Sector Labor Markets," NBER Working Papers 1179, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  15. Kahn, Shulamit & Lang, Kevin, 1988. "Efficient Estimation of Structural Hedonic Systems," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 29(1), pages 157-66, February. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Leslie E. Papke, 1995. "Participation in and Contributions to 401(k) Pension Plans: Evidence om Plan Data," NBER Working Papers 4199, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Charles Sutcliffe, 2007. "Should Defined Benefit Pension Schemes be Career Average or Final Salary?," ICMA Centre Discussion Papers in Finance icma-dp2007-06, Henley Business School, Reading University. [Downloadable!]
  3. Newman, Constance & Jarvis, Lovell, 2000. "Worker And Firm Determinants Of Piece Rate Variation In An Agricultural Labor Market," Working Papers 11977, University of California, Davis, Department of Agricultural and Resource Economics. [Downloadable!]
  4. Patricia M. Anderson & Bruce D. Meyer, 1995. "The Incidence of a Firm-Varying Payroll Tax: The Case of Unemployment Insurance," NBER Working Papers 5201, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. Anne Beeson Royalty, . "A Discrete Choice Approach to Estimating Workers' Marginal Valuation of Fringe Benefits," Working Papers 98008, Stanford University, Department of Economics. [Downloadable!]
  6. Elliott, R. F. & Sandy, R., . "Adam Smith May Have Been Right After All: A New Approach to the Analysis of Compensating Differentials," Working Papers 98-02, Department of Economics, University of Aberdeen. [Downloadable!]
    Other versions:
  7. Arístides Torche & Gert Wagner, 1997. "Previsión Social: Valoración Individual de un Beneficio Mandatado," Cuadernos de Economía (Latin American Journal of Economics), Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 34(103), pages 363-390. [Downloadable!]
  8. Vincenzo Andrietti & Eleonora Patacchini, 2004. "Occupationa Pensions, Wages And Tenure Wage Profiles," Economics Working Papers we043612, Universidad Carlos III, Departamento de Economía. [Downloadable!]
  9. Olivia S. Mitchell, . "Developments in Pensions," Pension Research Council Working Papers 98-4, Wharton School Pension Research Council, University of Pennsylvania. [Downloadable!]
  10. Robert L. Clark & Joseph F. Quinn, 1999. "Effects of Pensions on Labor Markets and Retirement," Boston College Working Papers in Economics 431, Boston College Department of Economics. [Downloadable!]
  11. Erwin Ooghe & Erik Schokkaert & Jef Flechet, 2003. "The Incidence of Social Security Contributions: An Empirical Analysis," Empirica, Springer, vol. 30(2), pages 81-106, June. [Downloadable!] (restricted)
  12. Louise Sheiner, 1999. "Health care costs, wages, and aging," Finance and Economics Discussion Series 1999-19, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  13. Olivia S. Mitchell & Robert S. Smith, 1991. "Pension Funding in the Public Sector," NBER Working Papers 3898, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  14. Anthony Marino & Jan Zabojnik, 2006. "A Rent Extraction View of Employee Discounts and Benefits," Working Papers 1108, Queen's University, Department of Economics. [Downloadable!]
    Other versions:
  15. Alan L. Gustman & Olivia S. Mitchell & Thomas L. Steinmeier, 1993. "The Role of Pensions in the Labor Market," NBER Working Papers 4295, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  16. Edward Montgomery & Kathryn Shaw, 1992. "Pensions and Wage Premia," NBER Working Papers 3985, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
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